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Cisco, based in San Jose, California, said the deal will build on its Internet-based products. It is the fourth acquisition announced by Cisco this year and marks the company's entry into Web-based conferencing products.

Latitude's desktop conferencing software and services allow office workers in different locations to share and distribute documents over the Web. Companies have turned to such Web conferencing to cut costs.

Companies are spending more on such technologies to help them save money, automate business processes and enhance communications within organizations, said Robert W. Baird & Co. analyst Steve Ashley.

"This is within a broader theme of collaboration (among workers)," he said. "It's an area of spending that is getting a lot of attention."

Cisco said it would pay $3.95 in cash for each share of Latitude, representing about a 30 percent premium over Latitude's closing stock price on Tuesday of $3.05.

Shares of Santa Clara, California-based Latitude soared 27.5 percent to close at $3.89 on the Nasdaq on Wednesday.

Cisco's entry into the Web conferencing market, which according to several estimates could grow to $3 billion by 2005, will further pressure smaller rivals such as WebEx Communications Inc. (Nasdaq:WEBX - news), whose stock fell 8.1 percent.

Shares of Cisco finished up 2.8 percent at $22.97.

Ashley said the landscape has not changed for smaller rivals like WebEx, but they still must be wary of Microsoft and Cisco.

"You minimize the threat at your own peril," he said. "I don't think the world changed drastically today for WebEx."

Latitude, which went public in 1999 and has 183 employees, had revenue of $26 million for the first nine months of 2003 and a net loss of $72,000.

Microsoft Corp. (Nasdaq:MSFT - news), the world's largest software maker, earlier this year spooked smaller rivals when it entered the Web conferencing market with its $200 million acquisition of privately held Placeware Inc.

Cisco said the acquisition of Latitude -- expected to close in the second quarter of its fiscal 2004 year which ends in January -- would lead to a nominal one-time charge for purchased research and development expenses.

Upon closing of the deal, Latitude will become part of Cisco's voice technology group.

Cisco also said it will convert all outstanding Latitude stock options to Cisco options.